Gold Advances Back Towards $1,200

On Thursday, gold rose as the 1% drop of the previous day lured buyers with the dollar retreating from a high of seven years against the Japanese yen.

On Wednesday, the metal dropped after polls showed weaker support from Swiss voters for the referendum proposal that would force a boost of gold reserves by the central bank.

According to Reuters, spot gold rose 0.8% at $1,192.69 per ounce and US December delivery gold futures went down $2.00 per ounce at $1,191.90.

Caroline Bain, Capital Economics analyst said, “You can’t deny the fact that rising interest rates and a strong dollar aren’t good for gold and it is certainly our forecast that the dollar will strengthen further next years. On the positive side, though, we are at the kind of levels where we’d expect quite a rebound in physical demand.”

On Thursday, the dollar index eased with investors betting that the Federal Reserve might start raising interest rates next year. The Japanese central bank is maintaining stimulative policies.

The stronger dollar usually weighs on gold, and this is priced in the US currency.

Gold declined in the last two months with the Fed moving closer to its first increase of interest rates in eight years with other economies announcing more stimulus. The effects of slow economic growth abroad could be limited in the US according to meetings of October’s meeting of the central bank, which were released yesterday.

Bloomberg quoted Tommy Capalbo, broker at Newedge Group as having said on telephone, “Expectations of a hike in US interest rates will continue to weigh on the gold market. We many see more support because of physical demand during the holiday season, but the long-term fundamentals remain very bearish.”

Platinum gained 1.9% at $1,205 per ounce and palladium rose 0.7% at $765 per ounce.

Silver rose 0.3% at $16.14 per ounce.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com

Jonathan Millet is currently the proud CEO of ForexMinute.com, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers. He also holds the position of Binary Options Consultant at ForexMinute.com.
Before ForexMinute.com was around, Jonathan was a successful Forex dealer and chief market analyst at Forexyard. He has also worked as a Forex trader. His other specialties include advising financial companies of how to stay head of the competition.

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